IBM's Path to the Future

Yesterday I proposed that IBM leads the world in delivering technology related services to businesses and therefore we may be able to get a sense for future winners by looking at what IBM is doing. 

Here are a few clues from IBM’s 2009 Annual Report:  

From: Samuel J. Palmisano, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

1. Building Analytics Capability:  “… the knowledge of the world, the flow of markets, the pulse of societies — can now be turned into insight through sophisticated mathematical models, also known as analytics. Where once we inferred, now we know. Where once we interpolated and extrapolated, now we can determine. The historical is giving way to the real-time, and even the predictive.  IBM is moving quickly to capitalize on this promise. We have built the industry’s premier analytics practice, with 4,000 consultants, mathematicians and researchers, as well as leading-edge software capabilities — bolstered by key acquisitions such as Cognos and SPSS. Our new Business Analytics and Optimization service line targets the highest-growth opportunities by delivering integrated analytics solutions based on the needs of specific industries.”
2. Changes in the Cloud:  “Thus, the data center is shifting from being a single physical place to something more like the Internet, a diverse set of services fueled by IT.”
3. Customers Want:  “So the questions we are hearing are no longer about whether a smarter planet is a real possibility. Now, there is an enormous hunger to learn how. CEOs, CIOs, governors and mayors are asking questions like: How do I infuse intelligence into a system for which no one enterprise or agency is responsible?”

From the Financials: 2009 total revenue: 

$95 Billion Global Technology Services Group: $37 Billion 

• Strategic Outsourcing Services
• Business Transformation Outsourcing
• Integrated Technology Services
• Maintenance
• Integrated Technology Delivery
• Business Process Delivery   

 Global Business Services Group: $17 Billion

• Consulting and Systems Integration
• Application Management Services

 As I read through the report some recurring themes indicated what IBM thinks will be big in the future: 

1. Cross Platform: No one vendor can solve all problems so there is significant value in being able to work across platoforms
2. New Ideas: Clients will pay for ideas they cannot think of themselves (new processes, new technologies, ideas that span systems or departments)
3. Outside the Company:  Security, compliance, and standards are among the functions that can be done better by outsiders

 So if you want to pick the winners of the future, pick companies that deliver technology related services that tie together different technology manufacturers and add some intelligence along the way.

Later:  IBM beats Wall Street expectations for Q1 performance.